Jim Cramer: Why We Sold Some Facebook and Bought Amazon

When we sold some of our Facebook earlier this spring we bought Amazon with it. The stock had been tarred and feathered by our president multiple times about how Amazon wasn't paying the USPS enough money. That might be very true, but the contract was negotiated at arms length.

So we took advantage of it and bought some. We then proceeded to get a 400 point move and while it was not "on nothing" so to speak, as the company reported an insanely good quarter on earnings after announcing it had 100 million Prime Members, we didn't want to be greedy and take nothing off. Not wanting to be greedy is subtly different from a stock going up on nothing, but we followed another sell discipline: we think that bulls make money, bears make money and pigs get slaughtered.

Now I know many of you are thinking, how come these guys selectively sell like this. One day they like it and then they like it less? No, we just think that to give back a big gain is always wrong so it pays to take something off the table. That's just good portfolio management.

It's the same thing, by the way, that we did when we took some Alphabet off the table during the spring. We like the company and the stock very much but we are mindful that, like Facebook when we made our sales, it had become too big for the portfolio.

Hence, another rule we have developed to avoid a bigger loss than we could fathom with any stock, including one we think highly of, when a stock gets to be more than five percent of the portfolio our inclination is to take some off. We don't want to be too beholden to any one position.

"The stock had been tarred and feathered by our president multiple times about how Amazon wasn't paying the USPS enough money. That might be very true, but the contract was negotiated at arms length....So we took advantage of it and bought some," he said during the call.

And the stock proceeded to jump 400 points but Cramer then talked about another one of the followed another sell discipline, which is "bulls make money, bears make money and pigs get slaughtered."

So he talked about how the team decided to take some money off the table because it is "just good portfolio management," he said.

Listen above for more.

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